Two top European Union officials warned the euro area against complacency about the debt crisis after an easing of market tensions, saying political battles lie ahead over the latest push to protect the single currency.
EU President Herman Van Rompuy and Jose Barroso, head of the EU’s regulatory arm, said the euro region can’t afford to backtrack on plans for a single bank supervisor and tougher oversight of national budgets.
“Not all member states feel the same degree of urgency, which probably is due to the fact that they are in different financial and fiscal positions,” Barroso, president of the European Commission, said in a debate with EU lawmakers today in Strasbourg, France. “Some of these issues are extremely difficult from a political and technical point of view, but the decisions should be as urgent as possible.”
A respite in European bond markets three years into the debt crisis risks weakening euro-area politicians’ push to add to their crisis-fighting armor, which includes a 500 billion- euro ($649 billion) permanent rescue fund established earlier this month and the threat of more automatic sanctions against spendthrift national governments.
Spanish and Italian bond yields have declined since European Central Bank President Mario Draghi vowed in July to do what’s needed to preserve the 17-nation euro and announced in September a bond-buying program for countries willing to sign up to budget-austerity conditions.
That did more than some 486 billion euros in commitments for Greece, Ireland, Portugal and Spain’s banking system since 2010 to soothe markets and has left governments with the task of agreeing on any rescue terms as well as on centralized bank supervision led by the ECB.
“We are now addressing the idea of financial integration,” Van Rompuy said in the Strasbourg debate held at the 27-nation European Parliament. “This work is going to be an awful lot more difficult than we believe. What we are really getting to now is the crux, the hard core, of sovereignty and solidarity.”
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